Australian Securities & Investments Commission v Axis International Management Pty Ltd (No 6) [2011] FCA 811

Australian Securities & Investments Commission v Axis International Management Pty Ltd (No 6) [2011] FCA 811

Ward and Axis committed multiple contraventions of s 727 of the Corporations Act by distributing application forms for shares without proper disclosure; Ward, as sole director, negligently failed to prevent or identify these contraventions. While not dishonest, his carelessness and the scale of activity warranted a six-year disqualification. Johnston, as the controlling mind of Firepower Investments and Green Triton, failed to impose or ensure compliance with legislative requirements, and his reckless disregard, significant enrichment, and the magnitude of public detriment warranted a 20-year disqualification from managing corporations.

Parties
Plaintiff: Australian Securities and Investments Commission; First Defendant: Axis International Management Pty Ltd (ACN 075 799 772); Second Defendant: Firepower Investments Pte Limited; Third Defendant: Owston Nominees No 2 Pty Ltd (ACN 001 769 099); Fourth Defendant: Sattvic Pty Ltd (ACN 114 153 954); Fifth Defendant: Seaswan Holdings Pty Ltd (ACN 059 000 538); Sixth Defendant: Quentin Phillip O'Doherty Ward; Seventh Defendant: Timothy Francis Johnston; Eighth Defendant: Green Triton Limited
Jurisdiction
Australia
Judgment Date
21 July 2011
Procedural Posture
Civil / Post Liability, Sentencing/disqualification Orders
Outcome
Disqualification orders made against Ward and Johnston under s 206E; varying lengths based on seriousness.
Legal Topics
Disqualification From Managing Corporations, Contraventions of Corporations Act, Director's Duties, General Deterrence, Breach of S 727 Corporations Act
Corporations Law Disqualification From Managing Corporations Contraventions of Corporations Act Director's Duties General Deterrence Breach of S 727 Corporations Act

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Parties

Australian Securities and Investments Commission

Plaintiff

Axis International Management Pty Ltd (ACN 075 799 772)

First Defendant

Firepower Investments Pte Limited

Second Defendant

Owston Nominees No 2 Pty Ltd (ACN 001 769 099)

Third Defendant

Sattvic Pty Ltd (ACN 114 153 954)

Fourth Defendant

Seaswan Holdings Pty Ltd (ACN 059 000 538)

Fifth Defendant

Quentin Phillip O'Doherty Ward

Sixth Defendant

Timothy Francis Johnston

Seventh Defendant

Green Triton Limited

Eighth Defendant

Procedural Posture

Civil / Post Liability, Sentencing/disqualification Orders

Legal Issues

  1. 1 Whether Ward and Johnston should be disqualified from managing corporations under s 206E of the Corporations Act 2001 (Cth)
  2. 2 Whether reasonable steps were taken to prevent contraventions of the Act
  3. 3 Appropriate period of disqualification

Ratio Decidendi

Ward and Axis committed multiple contraventions of s 727 of the Corporations Act by distributing application forms for shares without proper disclosure; Ward, as sole director, negligently failed to prevent or identify these contraventions. While not dishonest, his carelessness and the scale of activity warranted a six-year disqualification. Johnston, as the controlling mind of Firepower Investments and Green Triton, failed to impose or ensure compliance with legislative requirements, and his reckless disregard, significant enrichment, and the magnitude of public detriment warranted a 20-year disqualification from managing corporations.

Court Disposition

Disqualification orders made against Ward and Johnston under s 206E; varying lengths based on seriousness.

Orders

  • Quentin Phillip O'Doherty Ward is disqualified from managing corporations for 6 years pursuant to s 206E of the Corporations Act 2001 (Cth).
  • Timothy Francis Johnston is disqualified from managing corporations for 20 years pursuant to s 206E of the Corporations Act 2001 (Cth).